China

China’s 1 Percent vs. America’s 1 Percent

A new study by Peking University’s Social Science Research Center pulls back the curtain a bit on China’s überwealthy. The richest 1 percent of Chinese households control more than a third of the country’s wealth, according to the July 26 study.

Most of that is tied up in real estate. In 2012, the study says, real estate accounted for 70 percent of all household wealth in China. (The bottom quarter of households, tellingly, control just 1 percent of China’s wealth.) The outsize reliance on real estate as an investment vehicle for both individuals and enterprises is troubling, given widespread concerns about a property bubble. In June, apartment prices fell in 55 of China’s 70 largest cities, according to China’s National Bureau of Statistics. In the southeastern city of Hangzhou, property prices dipped 1.7 percent that month.

But how do China’s rich stack up against America’s? The U.S. Internal Revenue Service analyzes income, not household net wealth, and in 2012, America’s richest 1 percent took home 19.3 percent of household income. But incomes rose almost 20 percent for the top 1 percent, whereas they inched up just 1 percent for the bottom 99 percent.

Recently, economists Emmanuel Saez of the University of California at Berkeley and Gabriel Zucman of the London School of Economics estimated the distribution of household wealth in the U.S. They calculated “how much property different strata of society owned by looking at the income that was generated by that property,” as my colleague Peter Coy reported. The richest 1 percent of Americans, they found, control 40 percent of the country’s wealth, and the top 0.1 percent control more than a fifth—which would mean wealth in the U.S. is still more concentrated than in China.